Question
In: Finance
Both Bond Bill and Bond Ted have 11 percent coupons, make semiannual payments, and are priced...
|
Both Bond Bill and Bond Ted have 11 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 3 years to maturity, whereas Bond Ted has 20 years to maturity. Both bonds have a par value of 1,000. |
| a. |
If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
| b. |
If rates were to suddenly fall by 2 percent instead, what would be the percentage change in the price of these bonds? |
Bond Bill
a) percentage change in price:
b) percentage change in price:
Bond Ted
a) percentage change in price:
b) percentage change in price:
Solutions
Expert Solution
|
As nothing was mentioned excel is used. If you need with “financial formula”, let me know, will do that also. Thank you BOND BILL : (a) -4.84% (b) 5.16% BOND TED : (a) -14.15% (b) 18.40% |
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jeff jeffy answered 2 days agoRelated Solutions
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